Around the world over the last 20 years much has been learnt about the benefits and pitfalls of privatising former government utilities. Topping the list must be that success depends on far more than selling a minority stake to public shareholders. Official responses to proposed MTR fare hikes suggest the SAR paid no attention.

Tung Chee-hwa's call for rail operators to consider the 'the views of the public' before hiking fees reveals a familiar ad hoc amateurism in public policy making. Neither a capital-intensive rail company nor an advanced economy can be run on such woolly rhetoric.

The need for a formal fare mechanism was obvious when the MTRC sell-off was announced. Investors want predictable outcomes and transparency, while managers need commercial freedom. Above all, both groups want to operate in a de-politicised environment.

Taking the politics out of everyday issues such as fares and charges was a prime driver of the privatisation trend. Government leaders have better things to do and came to realise they are bad economic managers.

Mr Tung has bounced the MTRC issue in the direction of the Transport Advisory Committee. As a part-time body staffed largely by lawyers and academics, it has neither the expertise nor resources to assess a 'fair' fare. That would require a detailed financial analysis by specialists.

Complicating matters is the fact that the main swing factor in MTRC profits are land-premium deals struck with the Government and joint venture agreements with developers. This makes a judgment on fares based on likely future profits an absurd exercise. Moreover it is debatable whether part-time advisers should see such share price sensitive data.

This Government seems to have a visceral dislike of rule-based economic management. Arbitrary rulings in the telecommunications industry and Mr Tung's wrong-headed housing targets have the common thread of policy made on the hoof without systematic analysis of outcomes.

And yet Hong Kong has a strong record of formula-based economic systems, with the pegged exchange rate the best example. The power industry's scheme of control has outlived its useful life but had merit. With more privatisations planned, officials must jettison a creeping 'we know better' approach and trust the market within proper regulatory regimes.